Correlation Between Aberdeen Global and Freedom Bank
Can any of the company-specific risk be diversified away by investing in both Aberdeen Global and Freedom Bank at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Aberdeen Global and Freedom Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberdeen Global IF and Freedom Bank of, you can compare the effects of market volatilities on Aberdeen Global and Freedom Bank and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Aberdeen Global with a short position of Freedom Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberdeen Global and Freedom Bank.
Diversification Opportunities for Aberdeen Global and Freedom Bank
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aberdeen and Freedom is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Aberdeen Global IF and Freedom Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Bank and Aberdeen Global is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Aberdeen Global IF are associated (or correlated) with Freedom Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Bank has no effect on the direction of Aberdeen Global i.e., Aberdeen Global and Freedom Bank go up and down completely randomly.
Pair Corralation between Aberdeen Global and Freedom Bank
Considering the 90-day investment horizon Aberdeen Global IF is expected to generate 1.74 times more return on investment than Freedom Bank. However, Aberdeen Global is 1.74 times more volatile than Freedom Bank of. It trades about 0.03 of its potential returns per unit of risk. Freedom Bank of is currently generating about 0.02 per unit of risk. If you would invest 522.00 in Aberdeen Global IF on September 12, 2024 and sell it today you would earn a total of 71.00 from holding Aberdeen Global IF or generate 13.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 74.72% |
Values | Daily Returns |
Aberdeen Global IF vs. Freedom Bank of
Performance |
Timeline |
Aberdeen Global IF |
Freedom Bank |
Aberdeen Global and Freedom Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aberdeen Global and Freedom Bank
The main advantage of trading using opposite Aberdeen Global and Freedom Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberdeen Global position performs unexpectedly, Freedom Bank can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Freedom Bank will offset losses from the drop in Freedom Bank's long position.Aberdeen Global vs. Freedom Bank of | Aberdeen Global vs. HUMANA INC | Aberdeen Global vs. Barloworld Ltd ADR | Aberdeen Global vs. Morningstar Unconstrained Allocation |
Freedom Bank vs. HUMANA INC | Freedom Bank vs. Barloworld Ltd ADR | Freedom Bank vs. Morningstar Unconstrained Allocation | Freedom Bank vs. Thrivent High Yield |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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